Shweta Reddy, 31, working with a startup in the Delhi, recently bought a house In Dwarka. Reddy has taken a 20-year home loan at an EMI (equated monthly instalment) of Rs 65,000.
As India witnesses a surge in its younger workforce and revival signs of economic growth become visible, demand of loans home, personal or auto is being driven by those below 35 years of age.
About 45% of the credit demand in 2014-15 came from borrowers who were less than 35 years of age against 30% about five years ago, according rating agency CRISIL. Banks, too, prefer younger borrowers as their repayment tenure can be longer, which means higher earnings for the lender.
Banks and housing finance companies are also going all out to woo new customers with a host of discounts.
“There is more certainty in the job market as there is hope that economic activities would finally start picking up. Those who have just joined the workforce are also buying houses and cars, primarily because they are earning handsome salaries right from the beginning,” a senior State Bank of India executive said.
Gross bank credit towards housing went up by 9.6% in 2014-15 from 13.60% in 2013-14.
Typically, banks are willing to give loans in cases where 45-48% of the monthly salary goes as EMIs, irrespective of the income bracket.
Default rate in the home segment has also come down, said Harshala Chandorkar, senior vice-president, consumer services and communications, CIBIL.